Fatal Mistakes

America was founded on the idea of individual liberty — that free men are rational individuals whose interests are vastly more harmonious than antagonistic. As such, it was the first moral society. All previous systems of social order were based on coercive forces that subordinated individuals to the demands of society — demands defined by a favored, ruling class. In America, society existed to support the orderly and voluntary pursuits of free individuals. And, in these pursuits, individuals enjoyed the fruits of their own labor, earned through free trade in a free market. How could a fledgling nation of disparate individuals — motivated by self-interest, defiant of authority, and governed by personal morality and the laws of capitalism — prosper?

To make matters worse, many of the individuals to whom this extraordinary task of self-government had been entrusted were the dregs of European society.It was Europe's poor and uneducated who ventured forth to America, undaunted souls who came to create their own employment. Those from the upper classes, unwilling to abandon their jobs as superior intellects, stayed home. As P.J. O'Rourke once remarked, "The Mayflower was full of C students."

In his famous essay, “What Is An American” (Letter III in Letters from an American Farmer, 1781), J. Hector St. John Crevecoeur wrote of this unruly lot,

Alas, two thirds of them had no country. Can a wretch who wanders about, who works and starves, whose life is a continual scene of sore affliction or pinching penury; can that man call England or any other kingdom his country? A country that had no bread for him, whose fields procured him no harvest, who met with nothing but the frowns of the rich, the severity of the laws, with jails and punishments; who owned not a single foot of the extensive surface of this planet?

Arriving in America, these people were "united by the silken bands of mild government, all respecting the laws, without dreading their power, because they are equitable. We are all animated with the spirit of an industry which is unfettered and unrestrained, because each person works for himself." Crevecoeur elaborated that for each American, "the rewards of his industry follow with equal steps the progress of his labour; his labour is founded on the basis of nature, self-interest; can it want a stronger allurement?"

It was Europe's poor and uneducated who ventured forth to America, undaunted souls who came to create their own employment.

The rest was history — in two parts. Part One extended from the time of Crevecoeur through the "Roaring Twenties”: a period of unprecedented prosperity created by the visions, labor, inventions, innovations, scientific discoveries, and technological advances of free individuals persevering through the tribulations of free markets, largely unassisted by government. Part Two was the period since: a period of continued, but more limited and increasingly precarious prosperity, a prosperity constrained by the authoritarian state that emerged during the meddlesome FDR years toextricate us from the throes of the Great Depression — by dismantling the social, economic, and political apparatus underlying almost everything that succeeded in Part One.

The "silken bands of mild government" were quickly removed by FDR's Brain Trust — the intellectual descendants of elite Europeans who came here after our revolution, when it became safe for them to work and rule. United in their disdain for individualism and capitalism, they believed that what had worked superbly in the past was accidental and, in any case, inadequate for the grand plans they had for the future. By concentrating immense political power and unlimited borrowing capacity (not to mention their self-evident genius) in Washington DC, they created a Leviathan that, through political will and money (i.e., coercion and bribery), would eliminate the mistakes of individuals and businesses. Their marvelously noble and compassionate programs — promising social justice, economic equality, academic excellence, financial security, etc.; the contrivances of Democrats and Republicans alike — have plagued us since, with painful failure.

Normally, it is the pain resulting from mistakes that brings success and prosperity. Individuals and businesses, even state and local governments, feel such pain when they ignore natural social and economic forces. They use it to correct their errors; it guides them on a path to their justifiable goals. But the government created in the 1930s does not feel the pain of its mistakes. Its errors simply propagated themselves through its programs — uncorrected, magnifying failure — and onto the economy. Over 80 years earlier, the French economist, Frédéric Bastiat, understood this inherent flaw when, in Economic Harmonies, he wrote of authoritarian intervention:

[E]vil . . . follows upon error, but it falls upon the wrong person. It strikes him whom it should not strike; it no longer serves as a warning or a lesson; it is no longer self-limiting; it is no longer destroyed by its own action; it persists, it grows worse, as would happen in the biological world if the imprudent acts and excesses committed by the inhabitants of one hemisphere took their toll only upon the inhabitants of the other hemisphere.

We reside in the hemisphere of falling evil. Medicare, a system in which retirees receive 2.32 to 6 times more in benefits than what they contribute, threatens to bankrupt the country. But this is not a lesson; "it persists, it grows worse," with the grander mistake of Obamacare. We endure the War on Poverty, a Lyndon Johnson, Great Society plan to eradicate poverty — in ten years! It persists today, almost 50 years later, with the government annually doling out over $60,000 per “poor” household, in effect, bribing some to stay in “poverty” with money stolen from others. Spending $3,000 per student, our public education system was the envy of the world, when, in 1965, the federal government stepped in to improve it. Driven by federal requirements, spending today is almost $15,000 per student, and our "improved" system is at best mediocre.

Failure has become the norm; worse, it has become acceptable. Other than the Interstate Highway System and the early, but brief, success of the EPA (now a tyrannical citadel of scientific fraud and political corruption), there is no federal program that is not a costly, feckless, ongoing failure.

The War on Poverty persists today, almost 50 years later, with the government, in effect, bribing some to stay in “poverty” with money stolen from others.

Acceptability of failure began with the New Deal, as it anesthetized capitalism and domesticated individualism. This paved the way for the technique of using failure as an opportunity for reward and, when executed properly, even praise. The Federal Reserve, which was responsible for the banking crisis of 1930–33, was thereafter rewarded with expanded control over banking. The federal government grew in power as FDR's Keynesian demand management policies took 16 years to bring the economy out of a downturn that should have lasted only four. Yet FDR is praised for the recovery. Today, president Obama uses the very same policies, with the very same result: immense debt and prolongation of the economic slump they are designed to remedy. And financial regulators, who failed to prevent the financial crisis that caused the slump, were rewarded with the vast powers of Dodd-Frank financial reform.

Why do we tolerate these mistakes? To a large extent, it is because of what de Tocqueville called a "soft despotism" of paternalistic government, a government made despotic by citizens happy to relinquish their individuality. In Democracy in America (1835), he spoke of "an immense, tutelary power" that renders us compliant and submissive to a government that keeps us "in perpetual childhood."

Then, there is our regulatory system — a morass of overbearing rules that controls every industry in our economy and almost every aspect of our lives. This is the system that de Tocqueville exquisitely anticipated when he wrote:

Thus, after taking each individual by turns in its powerful hands and kneading him as it likes, the sovereign extends its arms over society as a whole; it covers its surface with a network of small, complicated, painstaking, uniform rules through which the most original minds and the most vigorous souls cannot clear a way to surpass the crowd; it does not break wills but it softens them, bends them, and directs them; it rarely forces one to act, but it constantly opposes itself to one's acting; it does not destroy, it prevents things from being born; it does not tyrannize, it hinders, compromises, enervates, extinguishes, dazes, and finally reduces each nation to being nothing more than a herd of timid and industrious animals of which government is the shepherd . . .

We (not you and I, of course) have become timid and industrious animals. We are afraid to hold the federal government accountable for its chronic failures. This is not to say that it should have no meaningful role in solving our social or economic problems. But government, especially our central planners and our regulatory supervisors, should feel the pain of their mistakes, just as we industrious animals do ours — swiftly, and by means of demotion, termination, or jail time. Conversely, they should be rewarded for success. Better yet, delegate most of those shepherd jobs to state or local government, or even to the private sector, where mistakes are less painful and successes are more likely.

Or, perhaps, success is but a whimsical notion, as quaint as the ideas of freedom, individualism, and self-reliance that brought prosperity in pre-Leviathan days. Besides, who knows if the poor and uneducated of yesterday would prosper in America today? However, it is painfully ironic that today's poor and uneducated are not up to the task, as they are "met with nothing but the frowns" of our modern welfare system — a towering monument to despair, erected from the mistakes of an all-giving federal government.

About this AuthorSteve Murphy is a retired missile defense systems engineer and software developer living on top of Green Mountain in Huntsville AL, where he does a little consulting, plays the stock market and writes — mostly about economics, science, and American life. He can be contacted at sfm@hiwaay.net.